Do not drive without approving, understand and sign a contract

Buying a new or used car may be the culmination of a long-awaited dream or the start of a terrible nightmare if the buyer does not make sure that all terms of the sale, financing and insurance policy duly approved by all parts before driving through the door dealer.

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If not, the buyer could be a victim of what in English is known as “Yo-yo financing”, which happens when credit is rejected after the buyer the car takes, and the dealer is forced to repossess the vehicle or require the buyer to accept less favorable terms and interest rates higher or down payment (downpayment).

This phenomenon emphasizes the need to obtain credit (preapproved financing) before going to look for a new or used from a dealership car, especially when the buyer does not have the best credit history (subprime car buyer), “said Carroll Lachnit” Consejara Consumer specialized Internet site

The ‘Yo-yo Financing’ usually occurs when the seller convinces the buyer to take the car dealership without money involved, before all procedures are properly approved by the bank and the concessionaire.

Agencies consumer protection have asked for years that all states pass laws against what is known as “spontaneous delivery” (spot delivery), before the terms of the financing are fully approved, especially at night or during the weekends when performing promotions dealers and banks are not available for approving credit applications.

Although the practice of “Yo-yo financing” is generally rejected across the automotive industry, there are some unscrupulous dealers who prey on unwary or inexperienced consumers with such force them to sign contracts with higher prices.

Many states have passed laws against “spontaneous deliveries” (deliveries spot), but the details of these laws vary from state to state. In many cases, the terms of the contract include clauses in which the licensee may request that the vehicle be returned after a deadline the loan application is not approved.

In some states like Illinois, where the buyer is obliged to return the vehicle to the dealer, while the dealer is obliged to return the buyer down payment (down payment) and / or the vehicle given in exchange (trade-in) if financial institutions do not approve the request for financing the purchase or lease.

However, in California, buying and selling contracts stipulate that if the credit is not approved, the buyer is still responsible for full payment stipulated in the transaction.

The most important thing when buying or hacerun lease, is that the consumer always get a written copy with all the details of the transaction, “Lachnit said.” Consumers should see in writing the interest rate of credit and term the same approved by the financial institution before driving the dealership. They should also be very careful when signing or initialing “conditional” clauses of the contract, as this may allow the dealer to change the terms of the contract, usually in less favorable terms for the buyer. ”

It is also important to have a valid insurance policy before leaving the dealership with the car just bought or rented, because in case of an accident, the buyer and / or driver, will be responsible for all expenses incurred as a result of the mishap .

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